EU Seeks More Egyptian LNG Despite Demand Concerns

The EU is seeking to maintain high volumes of LNG from Egypt despite growing indications that the country could suffer another gas crunch in the near future. Both Brussels and Cairo are also looking to a potential enlargement of the East Mediterranean Gas Forum (EMGF) to include North African states.

EU Energy Commissioner Kadri Simson told the EGYPS conference in Cairo that the EU recognized “Egypt’s role growing into a regional gas hub” and outlined that the new EU Energy Platform would be launching its “joint purchasing scheme covering about 13.5 billion cubic meters of gas."

LNG markets would be the main target of the broad EU scheme, Simson said, and referring to Egypt, added that “this is a significant opportunity to strengthen our energy ties further.”

Demand Concerns

However, Egyptian domestic gas demand is climbing steadily, government figures show, meaning that East Mediterranean gas sources in Israel and Cyprus could become increasingly vital for Egypt to maintain its role as a gas exporter and meet its domestic commitments. Egyptian Sales gas production climbed from 6.4 billion cubic feet per day over fiscal year 2020-21 to 6.7 Bcf/d over 2021-22 but consumption has risen steadily from 5.7 Bcf/d over 2017-18 to 6.08 Bcf/d over 2021-22.

Egyptian Petroleum minister Tarek el-Molla told the same EGYPS conference that Egypt expects to produce about 7.5 million tons of LNG this year in line with its 2022 production when he said it exported 80% of its LNG to Europe. He added that both LNG plants at Idku and Damietta on the Mediterranean coast were operating at less than full capacity and could be expanded.

“We haven’t yet reached 100% capacity [at the] facilities,” he said.

Egyptian LNG exports to Europe have jumped since the war in Ukraine with European and Asian destinations repositioning themselves, data from maritime intelligence firm Kpler show. Volumes to Europe leapt from 31% of total exports in 2021 to 71% last year while Asian cargoes dropped from 69% to 28%.

Europe’s provisional LNG supply deal with Egypt, signed in June 2022, also covers Israel and efforts are ongoing to boost Israeli gas exports to Egypt. These include Israel National Gas Lines (IGNL) laying a new offshore pipe between the Israeli port of Ashkelon to El-Arish in Egypt and a pipe link from Israel’s grid to the Arab Gas Pipeline in Sinai. But neither project is completed yet, an Israeli industry source confirmed late last month.

The East Med’s gas export prospects are also waiting on what concept option US Chevron will select to develop a second phase of its 22 trillion cubic foot Leviathan field which may or may not be combined with its 4 Tcf Cypriot Aphrodite gas field.

Enlargement and Decarbonization

El-Molla told the conference that in the next six years he expected to see more countries involved in the existing EMGF and that its remit would be extended to include “all types of energy” including renewables and hydrogen.

Speaking on the same panel, EMGF Chairman Osama Mobarez added that methane emissions, carbon, capture and storage and hydrogen would all be reviewed by the forum which would aim to encourage private sector and state involvement. Although he insisted that gas would “be needed beyond two decades”.

“Why not North Africa [states] in an East Mediterranean Energy Forum,” Nasser Kamel, secretary general of the Union for the Mediterranean told delegates. “If Europe is serious about [carbon] neutrality the southern shore of the Mediterranean as a hub is needed.”